Biotech IPOs smash record in H1, soaking up huge raises from the cash still parked on the sidelines. Will supply of buyers run out, like always?

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The News:

Last week the Nasdaq Biotech Index swooned 4% on Wednesday (July 27, 2018), only to rebound and halve that downdraft by Friday’s close (July 29, 2018). But despite the setback, the IPO market shows no signs of exhaustion. Not even close. Here’s a rundown on last week’s torrid dash for the cash.

1) Entera Bio Inc., which is developing oral formulations of treatments for a thyroid condition and osteoporosis, raised $11 million by offering 1.4 million shares at $8, the low end of the range of $8 to $10. Jerusalem-based Entera Bio lists on the Nasdaq under the symbol “ENTX.” Maxim Group LLC acted as a lead manager on the deal. Entera is initially applying their technology to develop an oral formulation of parathyroid hormone, or PTH, which has been approved in the US for over a decade. Shares closed the week down 21% at $6.30.

2) Elsewhere, included among recent SEC filings for initial public offerings, Bionano Genomics Inc., which is developing the Saphyr system for next-generation genome mapping, registered up to $35 million worth of common stock in an initial public offering. The San Diego, CA-based company was founded in 2003 and booked $16 million in sales for the 12 months ended March 31, 2018. It plans to list on the Nasdaq under the symbol “BNGO.” Roth Capital is the sole bookrunner on the deal. Bionano’s Saphyr system is “…a platform for ultra-sensitive and specific structural variation detection enabling researchers and clinicians to accelerate the search for new diagnostics.”

3) Liquidia Technologies Inc., a drug manufacturer developing dry powder therapies for pulmonary arterial hypertension, registered up to $58 million worth of common in an IPO. The Morrisville, NC-based company was founded in 2004 and booked $7 million in sales for the 12 months ended March 31, 2018. It plans to list on the Nasdaq under the symbol “LQDA.” Jefferies and Cowen are the joint bookrunners on the deal. Liquidia is focused on using its proprietary PRINT technology that enables precise production of uniform drug particles designed to improve the safety, efficacy and performance of therapies.

4) Neuronetics Inc., which sells a medical system that uses magnetic stimulation to relieve depression, raised $94 million by offering 5.5 million shares at $17, above the range of $14 to $16. Malvern, PA-based Neuronetics lists on the Nasdaq under the symbol “STIM.” Piper Jaffray and William Blair acted as lead managers on the deal. Neuronetics says its first commercial product, the NeuroStar Advanced Therapy System, is a non-invasive and non-systemic office-based treatment to stimulate specific areas of the brain associated with mood. Shares closed the week up 57% at $26.61.

5) Translate Bio Inc., an early-stage biotech developing mRNA therapies for genetic diseases, raised $122 million by offering 9.4 million shares at $13, within the range of $12 to $14. The Lexington, MA-based company had originally planned to sell 7.7 million shares. Translate Bio lists on the Nasdaq under the symbol “TBIO.” Citi, Leerink Partners and Evercore ISI acted as lead managers on the deal. Translate says it’s a messenger RNA (mRNA) therapeutics company developing a new class of potentially transformative medicines to treat life-threatening diseases caused by protein or gene dysfunction. Shares closed the week down 3% at $12.65.

6) Neon Therapeutics Inc. hopes to help open a new chapter in cancer therapy with their brand of highly personalized neoantigen vaccines and got out of the gate on Nasdaq at $16 a share, falling in the middle of the range with a $100 million haul. The biotech lists on the Nasdaq under the symbol “NTGN.” Morgan Stanley, BofA Merrill Lynch and Mizuho Securities are acting as joint book-running managers for the offering. Shares closed the week down 21% at $12.60.

7) Warren, NJ-based Aquestive Therapeutics Inc. registered up to $69 million worth of common in an IPO, even though unlike most of these new arrivals on Wall Street, the company can actually boast about some revenue. The biotech plans to list on the Nasdaq under the symbol “AQST.” Aquestive claims to have a late-stage proprietary product pipeline focused on the treatment of diseases of the Central Nervous System, or CNS. It believes that,

“The characteristics of these patient populations and shortcomings of available treatment options create opportunities for the development and commercialization of meaningfully differentiated medicines.”

Finally, two Bay Area biotechs crept under the wire, marking numbers eight and nine for that IPO hotbed, says BioSpace.

8) South San Francisco’s Tricida Inc.’s stock climbed 37% above its IPO offering to close at $26 a share. Tricida is focused on kidney disease. On June 5, the company announced data from its Phase 3 double-blind, randomized, placebo-controlled, multi-center trial of TRC-101 in 217 chronic kidney disease patients with metabolic acidosis. It met both its primary and secondary endpoints and was well-tolerated. Tricida offered 11.7 million shares at $19 per share, which eclipsed its target range of $16 to $18. The company raised $222 million. It believes the market for its drug is about 3 million patients in the US.

9) Menlo Park, CA’s Forty Seven Inc. closed at $15.05, approximately 6% lower than its IPO price. Forty Seven is an immuno-oncology company focused on the innate immune system. On June 3, it announced proof-of-concept data from two different clinical trials of 5F9, a monoclonal antibody targeting the human cell surface antigen CD47.

One was an ongoing Phase 1b/2 trial evaluating the drug in combination with rituximab in patients with relapsed/refractory non-Hodgkin’s lymphoma. The other is a Phase 1 pharmacokinetic (PK) and pharmacodynamics (PD) trial in patients with advanced solid tumors. Forty Seven offered seven million shares at $16, which was at the top of its projected range of $14 to $16 per share. It raised $113 million.

Steve’s Take:

Thanks to one Boston-based biotech run by some veterans and two upstarts in the San Francisco Bay Area, an extended hot streak of biotech IPOs has already surpassed last year’s annual total.

What do all these companies have in common? They are all run by people with a lengthy track record, backed by some serious investors and have a credible chance at developing new drugs. Still, be mindful they are all very high-risk offerings.

The four IPOs already launched last week–for a 6-month total of 33 compared to last year’s 31–accounted for a crisp bonanza of $546 million. Adding the haul of $796 million from a batch of biotech IPOs the previous week, and the 10-day total rings the cash register for a cool $1.34 billion.

Adding the previous biotech IPOs so far this year, which total $2 billion, and you get the tidy sum of $3.34 billion to date. And that doesn’t include the buy-in from the bankers after the initial raise.

All these new billions are being added to a record run of venture cash now coming in to back a new generation of startups–many of which will soon be looking to file IPOs of their own. Unless, of course, the record-setting stampede runs out of fuel—meaning of course, cash.

Steve's Take: Expect this #investment frenzy in new #biotech #IPOs to continue for now. Click To Tweet

Bottom Line:

Despite Donald Trump’s curious trade-war gambit, which he believes is good for America, and “easy to win,” there are a multitude of investors instead watching the lightning fast progress in new cancer treatments, for example, that bode handsome returns–if they succeed through the torturous maze of clinical trials and FDA scrutiny. That risk/reward potential is simply a part of what makes investing so attractive to just about anyone.

Expect this investment frenzy in new biotech IPOs to continue for now. As we all know, however, there’s a point where buyers of new issues simply peter out and sellers take over. That day is coming. Probably not this week as we come down from the record high levels into the July 4th pause. But with our mercurial leader in the White House…who knows what’s next?

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